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Energy Union, Not Fiscal Union, The Next Step Toward A Stronger EU


 

The EU in 2030 banner

Wikistrat recently concluded a three-week strategic simulation called “The EU in 2030″ in which our analysts looked into the future of the European Union. One of the policy options they created suggested that the EU should focus on forming an energy union, instead of a fiscal union. A summary is provided here.

After the creation of the banking union, there is no political will in Europe to push forward with integration policies. But the bloc faces a new energy reality. Much of its crude oil production is offshore in the North Sea, where Norway and the United Kingdom face maturing oil fields and declining production rates. Many states in the former Eastern Europe depend heavily on Russian oil and gas — a dependence they would much rather reduce.

Poland, Eastern Europe’s largest member states, should therefore take the lead. It is in a good position to drive the EU in this direction: Poland possesses its largest proven shale gas reserves, is building an LNG terminal and its energy production is heavily dependent on coal — which it is promoting (in spite of the EU’s environmental policies) as an alternative to Russian energy imports.

Under this policy option, Poland should start acquiring the energy portfolio in the European Commission that takes office in late 2014. It should also expand its role in the European External Action Service. Foreign Minister Radek Sikorski is already an unofficial candidate for the leadership of this institution. If Poland gets outplayed by other member states, it can follow the example of Germany and rely on its diplomacy to nominate officials to key background positions.

Step two involves quickly finalizing the Transatlantic Trade and Investment Partnership. This would expand opportunities for importing natural gas from the United States after 2017. Poland should enlist the help of especially the Baltic states and the United Kingdom to get the TTIP through as soon as possible. In the meantime, under Polish leadership and insistence, EU countries, especially Western ones, should build the necessary infrastructure for more LNG imports and the required distribution network.

This will set the stage for creating a new energy hub in Europe. Poland should lobby, on the heels of the trade agreement, for the widespread acceptance and the EU-funded development of fracking — at least in certain countries. Building on its own capacities, it should promote Poland-centered projects to link the Baltic states to the pan-European energy network and reduce the energy dependence of former Soviet satellite states on Russia.

Britain would be inclined to support this shift away from fiscal and political union and is one of the most enthusiastic backers of the TTIP. It partners with Poland to reinvigorate its special relationship with the United States.

France, despite its reservations about the transatlantic trade treaty, should also back this policy, seeing it as a way for Europe to “outgrow” its economic problems and avoid painful structural reforms. However, it will need a serious effort at building energy infrastructure, regasifiers and pipeline links in particular.

The Baltic states will support any initiative to decrease their dependence on Russian energy.

Bulgaria, the Czech Republic, Romania and Slovakia would support the policy for the same reason and also because it secures their energy supply after the gradual closing of their nuclear power plants.

Finally, Italy, always looking for additional sources of hydrocarbons, is one of the few countries that can afford to diversify from Russia without angering it due to other economic links and being already less reliant on it than most of its neighbors.

Wikistrat Analysts Nataliya Gudz, Gary Hunt, Lorenzo Nannetti and Andras Toth-czifra contributed to this analysis.

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Ask a Senior Analyst — Keir Giles


 

Wikistrat’s Facebook followers recently engaged in a 24-hour exclusive Q&A session with one of Wikistrat’s Senior Analysts, Keir Giles. Questions and Mr. Giles’ answers are transcribed below.

Keir Giles

Keir Giles is Director of Conflict Studies Research Centre (CSRC), a group of deep subject matter experts in Eurasian security originally established by the British Ministry of Defence. In addition to overseeing CSRC’s research and publications programs, he continues to follow his own specialist area of security problems affecting the Russian Federation, including military transformation and information and cyber security. Mr. Giles contributes to research projects across Europe and in the United States and is a regular media interviewee worldwide on Russian affairs. Uniquely, he is a double Associate Fellow of the Royal Institute of International Affairs (Chatham House).

William Holland: Other than the appeal to nationalism, how long can Putin mask economic deterioration with such irredentism?

Answer: Probably longer than we would assume if we consider this from a Western point of view. Russian society has historically been more resilient to this kind of tension than those states which eventually became liberal democracies. We don’t have to look too far back in time to take an example: during the late Soviet period, the authorities maintained societal stasis during a much longer-term and deeper economic deterioration under Brezhnev and his successors. Now, Russia has returned to a comparable level of control of the information which its population is receiving about both their own country and the rest of the world (with the notable exception of those active on social media), so once again the true economic picture is easier to mask.

As a historical rule of thumb, major societal change in Russia occurs in the aftermath of defeat in war — in the most recent case, the Cold War. By contrast, at the time of writing, Putin isn’t losing. (more…)

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Myanmar Moving Forward Report Released


 

Wikistrat is happy to release today the final report from its recently-concluded strategic simulation “Myanmar Moving Forward.”

Myanmar Moving Forward Report cover

Myanmar, also known as Burma, was long considered a pariah state, isolated from the rest of the world with an appalling human rights record. For 41 years, the country was ruled by a military junta that suppressed almost all dissent and wielded absolute power in the face of international condemnation and sanctions. In 2011, a nominally civilian government led by President Thein Sein was installed and a series of reforms in the months since the new government took up office has led to hopes that decades of international isolation could be coming to an end.

Late last year, Wikistrat asked its strategic community to map out Myanmar’s political risk factors and possible futures (positive, negative or mixed) for the new democracy in 2015. The simulation was designed to explore the current social, political, economic and geopolitical threats to stability — i.e. its political risk — and to determine where the country is heading in terms of its social, political, economic and geopolitical future.

The report, written by the simulation’s Lead Analyst, Dr. Maha Hosain Aziz, synthesizes the insights gathered by 65 of Wikistrat’s analysts across more than sixty scenarios.

Click here to download the PDF file of this report.

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Commercial Implications of Climate Change: Wikistrat Report


 

Wikistrat is happy to release today the report from a recent brainstorming session called “The Coming Storm: Commercial Implications of Climate Change.”

According to the Intergovernmental Panel on Climate Change established by the United Nations, each of the last three decades has been successively warmer than any other on record. Climate change models predict increased warming will have the direct effect of rising sea levels and an increase in the frequency and strength of extreme weather events. Climate change threatens societies’ access to clean air, safe drinking water, sufficient food supply and secure shelter. These factors, in turn, result in indirect challenges to existing consumption patterns and public policies.

In a world where goods and capital markets are highly integrated, firms depend on international markets to buy their inputs, sell their outputs and raise investment. In this interconnected world, climate change will be an increasingly important factor.

In February 2014, Wikistrat ran a two-week brainstorming drill exploring the commercial implications of climate change. More than fifty analysts collaboratively explored which industries are most vulnerable to climate change — and which industries stand to gain from it.

In this report, Wikistrat Senior Analyst Dr. Amanda Jakobsson highlights a selection of the insights from this exercise.

Click here or on the thumbnail to download the PDF report.

For more information about Wikistrat and for access to the full brainstorming session archive, contact info@wikistrat.com.

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Intra-European Migration Could Lead to Permanent Divisions


 

The EU in 2030 banner

Wikistrat recently concluded a three-week strategic simulation called “The EU in 2030″ in which our analytic community looked into the future of the European Union. One scenario suggested that labor migration from Eastern to Western European member states could lead to permanent cultural and economic division. A summary is provided here.

Wikimedia Commons Image

Gross domestic product per capita in the EU (2008)

The migration of workers from Eastern and Southeastern European nations benefits the more advanced economies of Western Europe. Not only are they able to maintain their high standards of living, but some host countries, particularly Germany, continue to expand exports.

Yet increased migration challenges the social fabric of Western European societies. While legally limited in their ability to control intra-European migration, many of these states’ immigration and naturalization laws are, at least partially, based on blood and heritage.

Migrants from East and Southeast Europe earn less on average and in many cases lack the opportunity for naturalized citizenship. They are developing a resentment toward their new “homes.” Lacking the incentive to build a permanent life in Western Europe, many send remittances instead to their home countries. Resentment against them is rising in turn. Nationalist and Euroskeptic parties are becoming more influential. The lack of political leaders who can convincingly explain the benefits of immigration, and the rising resentment toward Eastern and Southeastern migrants, can be expected to block reform of the blood-based naturalization systems.

Because of the migration, Eastern and Southeastern European nation suffer a population decline. It are the young and the skilled who emigrate. This development negatively affects their economic growth and thins their tax base. As a result, their budget problems will worsen over time while skill shortages in their national labor markets are unresolved.

While the Eastern and Southeastern peripheries of the European Union thus become increasingly dependent on aid, Western European countries are less willing to provide it. Joining the eurozone becomes a far-fetched prospect. Witnessing the struggles of Italy and Greece to manage their economies without national monetary policies, Eastern and Southeastern European member states decide against adopting the single currency. (more…)

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Apply for Wikistrat’s May 2014 Internship Program


 

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Are you a young professional working in international relations? Or a college student in relevant fields? Then Wikistrat’s January 2014 Internship Program might be a great opportunity for you.

Wikistrat’s internship gives junior geostrategic thinkers analytic experience by enabling them to interact with some of the world’s leading analysts during live geopolitical simulations and contribute to the theoretical knowledge base of Wikistrat, all in a unique Web 2.0 environment.

Wikistrat regularly train interns to become part of a new generation of strategic thinkers. During an initial three-week training period, interns are introduced to Wikistrat’s network, its methodology and projects. Graduates from the three-week training period become interns in the community for another three months, working side by side with leading geopolitical analysts from academia, the private and public sector. The best interns are, after three months, invited to join Wikistrat’s analytic community with the rank of Researcher where they can participate in paid client simulations.

Click here to learn more about internships at Wikistrat and to read the application guidlines.

For the May 2014 Internship Program, starting May 1st, applications should be received no later than April 17th. You can email a resume and brief cover letter to info@wikistrat.com. (Late applications will not be considered.)

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Ask a Senior Analyst – Rick White


 

Wikistrat’s Facebook followers recently engaged in a 24-hour exclusive Q&A session with one of Wikistrat’s Senior Analysts, Rick White. Questions and Mr. White’s answers are transcribed below.

Rick White

Colonel (Ret.) Rick White, President of Indus Strategic Solutions, assists clients in the development of international business strategies. As a Foreign Area Officer, he spent ten years in India, with his final assignment as the Senior Defense Official/Defense Attaché at the United States Embassy in New Delhi. He was also the Defense Attaché in Afghanistan. He served overseas in Pakistan, Qatar and Germany and has worked at U.S. Pacific and U.S. Central Commands in senior positions. He is a frequent contributor on American national security issues.

Matt R. Batten-Carew: Col. White, given India’s desire to play a larger role in Central Asia, and Afghanistan specifically, do you foresee a push by India to expand its operations at the Farkhor Airbase on the Tajik-Afghan border in order to play a more important strategic role in the region? More broadly, might India open a military base within Afghanistan itself to facilitate future military cooperation? Would regional opposition make this impossible?

Answer: I think India has and will continue to have an important role to play in Afghanistan’s future. However, I do not think a military base in Afghanistan is a likely move by India. In many ways, Farkhor has demonstrated how difficult it can be for India to operate a base outside its national boundaries. India has not really used Farkhor as a regional base to expand its operations in Central Asia and it is unlikely that role will exchange.

I do expect India to increase the amount of training that it provides to the ANSF in India, but I do not expect a major expansion of Indian military forces in Afghanistan. Regional perceptions are a part of the reason, but the real reason is much more pragmatic—force protection is difficult and India has real enemies in the region.

In addition to an expansion of ANSF training in India, I believe that India will increase its economic assistance and will have good relations with the new government. All the leading candidates have had long-term relationships with the Indians. India has focused its development activities — less the major road development project in Nimruz Province — through the central government in Kabul. This may get adjusted to working more closely with provincial and local governments, but I do not expect India to change its focus on doing the projects through the Afghan government.

In conclusion, post-2014, India will and should play a significant role in the further development of Afghanistan. However, India will not put a military force in Afghanistan to accomplish its goals. India desires, and will continue to be a positive force in the further development of a new Afghanistan. (more…)

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Russia’s Greatest Challenge for the Next Decade: Wikistrat Report


 

Wikistrat is happy to release today the report from its recent brainstorming exercise “Russia’s Greatest Challenge for the Next Decade”.

In February, both the Sochi Olympics and the unfolding events in Ukraine drew international focus to Russia.

Both events demonstrated President Vladimir Putin’s eagerness to promote and restore the perception of Russia as a global power. In 2013, he seemed to be on a roll after sidelining the domestic opposition and successfully tightening his grip on the Russian political and business elite. Most importantly, he seemed be restoring Russia’s clout as a geopolitical power by capitalizing on the foreign policy mishaps and weaknesses of its rivals.

Since then, the challenges that Russia and its leaders will face in the next decade have become increasingly visible. Wikistrat’s analysts have identified many of these challenges and threats, including:

  • Risks associated with Russian power projection abroad;
  • Systemic problems in the Russian economy;
  • Transfer of power after Vladimir Putin’s term ends;
  • Russia’s pressing demographic problems; and
  • Dual trends of both increasing nationalism and persistent separatism.

During the month of February, Wikistrat held a collaborative brainstorming exercise to predict the greatest challenges Russia faces over the next ten years. More than forty analysts from Wikistrat’s global community of experts participated in the exercise; this report, authored by Wikistrat Contributing Analyst András Tóth-Czifra, is a summary of the brainstorming drill and the crowdsourced analysis produced therein.

For more information about Wikistrat and for access to the full brainstorming session archive, contact info@wikistrat.com.

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Succession Battle in Uzbekistan Could Prompt Russian Intervention


 

Wikistrat recently released its report from the strategic simulation “The Next Russian Military Intervention” in which analysts were asked to propose where might be the “next Crimea”.

The report, by Wikistrat Senior Analyst Prof. Mark Galeotti, was also featured in Business Insider and described the five most likely scenarios from the simulation. Today, we would like to highlight a sixth scenario which suggested that a succession crisis in Uzbekistan could prompt a Russian military intervention.

Presidential Press and Information Office Photo

Prime Minister Shavkat Mirziyoyev of Uzbekistan (second from left) poses with President Serzh Sargsyan of Armenia, then-President Dmitry Medvedev of Russia and President Alexander Lukashenko of Belarus, May 8, 2010

When Islam Karimov, Uzbekistan’s president for life, succumbs to another heart attack, the battle for succession flares. Gulnara Karimova, once thought to be most likely to inherit the presidency from her father, does not recover from the 2013 blow to her reputation and power in time to renew her claim. Instead, the main succession battle takes place outside the Karimov family, pitting Prime Minister Shavkat Mirziyoyev against Vice President Rustan Azimov, who is also finance minister.

While Mirziyoyev is backed by Russia and is in a stronger financial position, thanks in part due to his daughter’s marriage to a Russian oligarch, Azimov’s conflict with Gulnara Karimova in 2013 (when she accused him of corruption) provided him with significant popular support.

When Mirziyoyev is nevertheless declared the winner in an election, Azimov calls his supporters to the streets. Busy establishing his own system, Mirziyoyev does not respond harshly at first, allowing the protests to spread across the country. After a few violent altercations between protesters and police, however, the new president makes use of the situation to arrest Azimov for inciting “terrorism” and sends out his troops. When the demonstrations subsequently take a turn for the worse, Mirziyoyev disappears. Rumors spread that he was killed.

Russia cannot allow Azimov, who is a proponent of Uzbekistan’s strategic partnership with the United States, to take power and push the country further away from Russia. Nor it can allow another popular putsch against authoritarianism in its neighborhood.

President Vladimir Putin sees this as a chance to undo Uzbekistan’s cooperation with the United States, reintegrate the country into the CSTO and reverse what otherwise might be trend of populist anti-authoritarian risings in post-Soviet Eurasia. In addition, the American withdrawal from Afghanistan and closing of the Manas airbase in Kyrgyzstan emboldens Putin who feels the time is right to reestablish Russian preponderance in the region. (more…)

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Insights from the Wiki: Afghanistan Splits, Provoking Central Asian Cold War


 

AFGHANISTAN POST-NATO DRAWDOWN

Wikistrat recently concluded a two-week simulation called “Afghanistan Post-NATO Drawdown” in which our strategic community was asked to map out what the country will look like in 2017, three years after American and NATO forces have pulled out. One scenario suggested the country could split in two, instigating a Central Asian cold war. A summary is provided here.

Following the withdrawal of international forces, the central authority in Kabul is irreparably weakened. Local army commanders make deals with a resurgent Taliban. Regional warlords compete for territory and opium revenues. The security forces split along ethnic lines.

The collapse of authority worries neighboring states. Pakistan moves first, levering its relations with the Pashtun to use the Taliban as a “stabilizing force.” China sees its investments in Afghanistan at risk and fears a destabilized country will offer safe haven to Uighur insurgents operating in Xinjiang. Initially, it moves limited forces across the border to “stabilize” the frontier, but over time sees attractions in collaborating with Pakistan to minimize its own involvement.

Iran renews its traditional links to warlords in the Herat region, exchanging weapons for influence. Its ability to offer arms is enhanced by Russia, which is cautious about overcommitting again in Afghanistan, but sees advantages in building on its alliance with Iran.

The interference by regional powers causes the tribal conflicts in Afghanistan to coalesce into two camps, one predominantly Tajik and linked to Iran and Russia and the other predominantly Pashtun and tied to China and Pakistan.

By 2017, Afghanistan has split into two semi-autonomous regions. Within each region, there is sufficient fear of the other to permit coherence. The rump national government has become irrelevant. Low-level violence between regional militias continues on a nearly daily basis, but the regional sponsors ensure that this does not get out of control. (more…)

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